Phelps Dodge and TVI mull joint venture

Vancouver – A letter agreement between TVI Pacific (TVI-T) and Phelps Dodge (PD-N) allows the copper giant to fund initial exploration activities in China’s Yunnan province while the companies negotiate the terms of a formal joint-venture arrangement.

Hunan Pacific, TVI’s wholly owned Chinese subsidiary, will carry out preliminary assessment of a mutually agreed-upon area of interest comprising 83,650 square kilometres. The land package is considered prospective for copper and associated minerals, namely gold and molybdenum.

TVI notes that Hunan Pacific is the first foreign mining company to be granted both Wholly Owned Foreign Enterprise (WOFE) status and a Qualified Explorer License under Chinese law. Cliff James, TVI’s chief executive officer, adds that this status “offers a significant advantage for Phelps Dodge, which does not yet have a base for exploration in China.”

Phelps Dodge does have a geological databank that will be acquired by Hunan Pacific for collation and interpretation. The copper company will finance that acquisition, and will also provide US$115,000 to finance the estimated costs of the initial exploration assessment. These funds could be increased if warranted, TVI notes.

The definitive joint-venture to be negotiated would include the terms governing both exploration and possible production activities. While the letter agreement is viewed as a binding, enforceable contract, it does not obligate either party to enter into further agreements.

TVI’s Chinese subsidiary is active in other parts of China, including the Golden Triangle region encompassing Gansu and several adjoining provinces. The company is also exploring the Shuikoushan gold project, and has filed for exploration licenses in Tibet. The company says a second “potential alliance” is under negotiation based on the company’s holdings and operating status in China.

TVI is also active in the Philippines, where it operates the Canatuan gold-silver mine, and holds a 3.5% net smelter return royalty on the Rapu Rapu mine project, along with various exploration projects.